It turns out that all Americans, regardless of income, spend a large percentage of their income on luxuries.
People who make the most money spend the biggest chunk of their incomes on luxury goods, but even the poorest households spend a significant amount for luxuries, according to an analysis released this week by Deutsche Bank Research.
The wealthiest families (the top fifth of earners) spend around 65% of their incomes on luxury goods and 35% on necessities, according to the study, which looked at spending habits between 1984 and 2014. Middle-income households weren’t far behind: They spend 50% on luxuries and 50% on necessities.
Even the lowest income families (the bottom fifth of earners) spend 40% on luxuries and 60% on necessities, according to the study’s author, Torsten Slok, chief international economist for Deutsche Bank Securities.
The median household income in the U.S. recently rose to $59,361.
The bottom two fifths of earners made $47,300 or less in 2014, according the Tax Policy Center. The middle two fifths made between $47,300 and $134,300 and the top fifth made more than $134,300.
The Deutsche Bank Research report defined luxuries as “goods or services consumed in greater proportions as a person’s income increases” and necessities as those goods or services that make up a smaller proportion of spending as a person’s income increases. full story